Statistics have proved that more than 70% of the radio spectrum is not used efficiently due to fixed spectrum allocation policies. More often, considerable portion of the allocated spectrum is used intermittently with variations in effective utilization being 20% to 80%. Clearly the regulatory process of ensuring the optimal use of the spectrum needs to be flexible and responsive in order to adhere to changes in technologies, demand markets and public policy. Essentially every wireless carrier subscribes it own license to avoid interference and for new technologies, find difficult to operate in their spectra because these are already occupied by commercial vendors, operators, contractors and the government. In any case, it is difficult to reclaim and release spectrum bands already licensed, so a new dynamic policy of spectrum allocation can be employed. In this paper, we present an effective strategy of spectrum estimation like those of the Periodogram, Welch Spectrum Estimation and Overlap Window Averaged Spectrum Estimation and present the architecture of the optimal Spectral Estimator using Polyphase Filter Banks for Cognitive Radio. In this context, a number of Primary Signals (Licensed Users), Secondary Signals (Unlicensed Users) of different SNR and different Carrier frequencies are made to occupy a wide frequency band. The designed Cognitive radio intelligently scans the entire frequency spectrum and searches for spectrum holes, the vacant bands where a potential secondary User can access the band without causing significant interference to the Primary Users.
